Mr. Smith borrowed 31000 to purchase stock for his baseball card shop. He repaid the simple interest loan after three years. He paid interest of 8500. What was the interest rate?

**Solution:-**

To find the interest rate, use the formula below where R is the rate, I is the interest paid, P is the principal, and T is the time.

R =

Interest is the price paid for using the money. Identify the interest.

I = 8500

Principal is the amount of money borrowed or invested. Identify the principal.

P = 31000

Time is the number of days, months, or years that the money is borrowed or invested.

Identify the time.

T = 3 years

Substitute values determined above for I, P, and T in the simple interest formula.

R =

=

Multiply the denominator.

Simplify the expression, rounding to two decimal places.

= 0.09

Therefore, the interest rate was 0.09 or 9% per year.